Comparison of Riga’s economic sectors by total value added (percentage)

Source: Riga City Council Department of Finance

There have been a number of changes in Riga’s economic sectors over the last decade. Fifteen years ago the processing industry was the largest sector in the capital’s economy; it created around 23% of the value added in the city. During the following years, the development of the processing industry in Riga, and nationally, became slower than that of other sectors: its proportion decreased by 8.7% in 2007. From 2004 to 2007, development of the trade, construction and commercial services domestic market sectors was especially rapid, and, in 2007, these sectors constituted 52% of the city’s total value added. The economic downturn has made corrections to the structure of the capital’s economic sectors. Due to a radical decrease in activity in the domestic economic sectors, especially trade and construction, the proportion of both of these sectors within the structure of the city’s total value added diminished by 6.5% over the last two years. Although the proportion of production has not yet increased, the orientation of Latvia’s economy towards the production of goods for export could increase the importance of this sector in the structure of Riga’s economy in the coming years. The proportion of the transport sector in the city’s economy has also slightly increased over the last two years.

Commercial services

Economic activity in the largest sector of the city’s economy – “transactions involving real estate, rent and commercial services” did not decrease in 2009. On the contrary, this sector radically increased its proportion as compared to other sectors, and reached 24% of the total value added in the city. 60% or the largest part of the value added in this sector was created by real estate transactions. In spite of the remarkable decrease in real estate prices and the slowdown of activity in this area, the value added by the sub-sector has not diminished during the last years. As well as real estate transactions, this sector also includes a variety of commercial services: hire of vehicles, cars and equipment, computer services, scientific research and others.

Manufacturing

In 2009, there was a considerable decrease in industrial output in the processing industry. The size of manufactured industrial production was 1.1 billion LVL, i.e. 30% (according to the evaluation in real prices) less than in 2008. Producers’ reduction in prices by 4.7% impacted significantly on the industry, and the volume of output decreased by more than 25% per year. Riga’s share of the total output of Latvia’s processing industry diminished from 43% in 2008 to 41% in 2009. Approximately 50% of products manufactured in Riga were exported. The total volume of industrial output in manufacturing companies reached 1,112 million Lats in 2009. Industrial output decreased by 39% as compared to 2008.

Trade

The proportion of trade within the structure of Riga’s economic sectors has decreased by 4.5% over the last two years. However, trade (wholesale, retail business and repairs of household appliances) is still the second largest sector of the city economy, creating around 19% of the total value added in the city and providing jobs for approximately 88,000 (22% of the total number of employed).

This material has been prepared in cooperation with the City Development Department of the Riga City Council and www.investinriga.com